If you're planning to buy a home, you're faced with a quandry. Should you save for a house or contribute to retirement savings plans? Despite the advertisements for no money down mortgages, you're probably going to need a hefty sum to buy a house or condo, not to mention additional money to pay moving costs and the cost of accoutrements that make a house a home. In fact, given the recent spate of foreclosures due to risky lending practices, it's likely that would-be home buyers will have to ante up even more of a down payment than before.
Temporarily suspending retirement plan contributions to build up your housing fund is something that shouldn't be taken lightly, but buying a home is such a smart financial move that it may be justified. But before dropping your contributions entirely, keep in mind that it's possible to tap into almost all types of retirement savings plans to help finance a home purchase, including:
• Traditional IRA
• Roth IRA
• Workplace retirement plans, including 401(k), 403(b), tax sheltered annuity (TSA), and Federal Thrift Savings Plans (TSP)
Depending upon the plan, money can either be withdrawn or borrowed for purposes of buying a first home.
Other sources of down payment money. Here are a couple of additional ways to add to your down payment ante: